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Oil headed for era of price chaos Posted: Thu, 04 Oct 2007 [miningmx.com] -- OIL PRICE VOLATILITY will be the least of our worries if one scenario Simon Ratcliffe paints has any weight. Ratcliffe is chairman of the Association for the Study of Peak Oil South Africa (Aspo), which has been studying the effects should a peak in oil production occur. He suggests peak oil production began this year, the implication of which is an interminable decline in supply followed by societal and economic disintegration. And the much-vaunted solution – discovering and developing alternative energy sources – is but a mild palliative, says Ratcliffe. German organisation The Energy Watchgroup believes global coal resources will start to deplete by 2025, while uranium, one of the most commonly found minerals in the world, will reach peak production in 2013. “South Africa has vast amounts of uranium, so on a national level that may become part of a solution – but it’s not a global solution,” Ratcliffe says. The recommended response from Aspo ranges from controversially suggesting South Africa adopt a population control policy through to localised agricultural methods and better urban planning that integrates work and living spaces. Aspo’s thinking is big-ticket stuff, but it looks impractical in parts. For example, it’s suggested making coal a national asset in an effort to change the way such natural resources are consumed. Selling coal offshore is tantamount to “selling our future,” says Ratcliffe. Short-term commercial interests are being put above the long-term sustainability of South Africa’s energy sources. But that will plainly jar with South Africa’s major coal producers, which have recently backed a R1.1bn expansion of the Richards Bay Coal Terminal and are now considering another capacity improvement. “There’s a tension between private and collective interests. People are making money from high coal prices but at some point it damages our long-term collective interests,” says Ratcliffe. In Aspo’s view, failing to find a solution to declining liquid energy resources – which includes immediately installing a framework – could result in wide social and economic mayhem. Were South Africa to continue consuming oil as it currently does, there will be massive disruption to transport services, food prices and conflict and security, says Aspo. That extends to governance issues, such as the breakdown in local town administration, says Ratcliffe. “Local conflict over scarce resources intensifies and the country is increasingly fragmented into small units controlled by unco-ordinated militias,” Aspo says in a study called “Current global challenges and alternative futures for SA”. Ratcliffe acknowledges it sounds like a Mad Max scenario but warns sceptics not to underestimate the exponential effect of Chinese consumption. “Over the next few years the Chinese economy will start consuming more than it’s ever consumed. That’s the power of exponentials,” says Ratcliffe. In South Africa alone, a growth rate of 6% will mean the country will consume more energy that it’s ever consumed in 11 years’ time. “It’s scary – but where’s the oil going to come from?” he asks. Quite how Ratcliffe and Aspo are going to make those points stick with a Government that has well defined short-term considerations, such as creating employment and fostering economic development, is anyone’s guess. Ratcliffe believes increasing consciousness is a good start. He spoke at a conference endorsed by South Africa’s Minerals & Energy Department in Johannesburg last week and another conference involving Aspo’s international chapters is scheduled for November. “There’s got to be a starting point. If that means it’s a talk shop, then so be it,” says Ratcliffe. Aspo’s ultimate aim is to have questions about the future consumption of liquid fuel resources adopted by the Presidency in a single policy. Click Here to subscribe to our daily newsletter
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